Version 3.0. Channel Vision. The Current and Potential Role of Catalogues in UK plc. pixels. The Current and Potential Role of Catalogues in UK Plc 1

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1 Version 3.0 Channel Vision The Current and Potential Role of Catalogues in UK plc pixels The Current and Potential Role of Catalogues in UK Plc 1

2 Two years ago we conducted our first study into the current and potential role of catalogues in UK plc. Last year we released our second report. Over the last two years marketing has moved on dramatically... social media and technology has continued to rise, highlighted with such power moves as Facebook buying out WhatsApp for 19bn, and the increase in mobile video advertising, which grew by 1,260% to 23m between mid-2012 and mid-2013 (Research by Nielsen). On top of this, new tricks, such as the selfie phenomenon, have also become neat marketing tools for brands and celebs alike. All in all, marketing is changing and developing at a terrific rate. With this in mind, last March we purchased a fast growing digital agency, and rebranded it Digital 4 Business. Together, both Catalogues 4 Business and Digital 4 Business provide clients with a very powerful online/offline marketing offering. It s been a fantastic year for both companies. And it s great to be able to offer a digital service, whilst still continuing to build our growth within the direct marketing world. Together we have a brilliant team. We re learning from each other all the time, constantly improving each other s game and always looking to improve our offering. This is why we carry out these yearly studies; understanding what companies are going through, and planning for the future, will only help shape our services. We hope the insights help you and your business navigate your way through this increasingly interconnected, multi-channel world. Ian Simpson Managing Director Contents BUY ME! Method p.3 Executive Summary p.4 Sales & Plans p.5 Sales Threats p.6 What s in the Mix? p.7 What delivers sales? p.9 Changes to the Mix Going forwards p.10 Digital Tools p Smoke and Mirrors p.12 Catalogues p.15 Why Not? p.16 Are Non Catalogue Users Missing Out? p.17 Catalogues Issues p.18 About Catalogues 4 Business p.19

3 Industrial Supplies Market Sector Trade Textiles, Carpets & Interiors Gifts and Giftware Food & Drink Fashion, Jewellery & Footwear Automotive Travel & Tourism Furniture/ Household Goods Cog size indicates size of market share Sports & Leisure Products Training and Education Engineering Other Charity Telecoms & Technology Business Services Horticulture Office Supplies Who do you sell to? 29% 35% 36% Method The study is based on a study of 310 UK organisations. The interviewees are drawn from businesses, both B2B and B2C, in a diverse mix of industry sectors. While many of those interviewed are small and medium sized businesses, we also have the views of some significant players, with 12% of those studied having a turnover in excess of 20 million. Consumers Other Businesses Both Turnover Less than 500,000 28% 500,000-1m 10% 1m - 5m 20% 5m - 10m 14% 10m - 20m 6% 20m - 50m 6% 50m - 100m 2% More than 100m 4% The Current and Potential Role of Catalogues in UK Plc 3

4 Executive Summary This is our third Channel Vision report. Our previous two pieces of research have been very well received, and doing this for a third time in a row provides a fantastic benchmark. 66% of companies are expecting sales to grow during the year ahead, where 15% are expecting a substantial growth. Traditional marketing methods top the bill when it comes to successful marketing tactics, with networking and advertising being named 1st and 2nd. Catalogues are up there with SEO. Whatever industry we are in, it is always useful to get a snapshot of what is happening in our marketplace. It is vital that we understand the issues and trends experienced by our customers and clients, and respond accordingly. This year, similar to last year, we ve really dug deep into what companies are doing within the digital marketing world, as well as of course looking at their activities within the traditional marketing arena. Once again, one thing that this report shows, is just how vital catalogues are to the marketing mix, in fact, more so than ever. Worryingly, given these ambitious plans, a quarter report that marketing activities are not performing as they should. However, those with catalogues say that their catalogues bring in half their sales (one in ten admitting this), whilst nearly one in five (18%) say that their catalogues deliver 30% of sales. What s even more promising is the fact that the majority of businesses with a catalogue said that this year their catalogues have brought in more sales than previous years (33% agreeing to this). Social media is still as present as ever, however, Google Plus is slowly catching up Twitter, LinkedIn and Facebook with 17% of those studied now using the platform. 14% state that their catalogues drive 40% web sales, with one in five (18%) then saying that their catalogues are actually going to be even more important for them this coming year. 4 Catalogues4Business Ltd

5 Sales & Plans Which of the following are you planning to do in the year? 46% Increase sales a bit (by up to 20%) 23% Maintain sales 15% 2% Increase sales massively (by 50% - 100%) 7% Maintain the decline Increase sales substantially (by 20% - 50%) 3% At least double sales Tree size indicates sales increase After the doom and gloom of recent years, research shows that two thirds (66%) of companies are expecting sales to grow in the year ahead. However companies are still insisting on playing the cautious game, with 30% trying to stem the downturn in sales or maintain the status quo. Marketing Insight Once again there is a positive feel, with 66% of respondents predicting growth. It s great to see such optimism continuing, but in order to make this growth happen, businesses must adapt and adopt. Marketing is changing, faster than we realise and companies who test, measure and then revisit are likely to see the best results. The Current and Potential Role of Catalogues in UK Plc 5

6 Sales Threats In our 2012 study, rising costs was by far the dominant threat challenging these sales targets. Whilst in our study last year it was competition from UK organisations which posed the biggest threat (44%). However, this year, rising costs have come back to hinder sales, with 45% seeing this as the biggest threat. UK competitors (39%) is then seen as the second largest threat. Lack of customer confidence is also a concern for over one in four (26%). Marketing not performing as it should is also reported to be a problem by 24%, whilst sales and marketing budgets are also under pressure with nearly one in five (17%) admitting this. What are the biggest threats to your sales? Rising Costs Marketing Not Performing as it should Competitors in the UK Competitors Overseas Poor Performing Distributors/ Sales Team Declining Sales and Marketing Budgets Lack of customer confidence 11% 15% 17% 24% 26% 39% 45% The Influence of Catalogues Not surprising that those companies who have a catalogue, and those that don t, both admit that rising costs are their biggest threat to sales. What is interesting however, is that 41% of companies who do have a catalogue stated that they saw competitors in the UK as a major threat. Perhaps this is why they use catalogues as a sales tool; to help them gain that competitive advantage. Companies with catalogues also seem more concerned with customer confidence than those companies that don t have a catalogue. This may point to the ability of catalogues to communicate, through responses, the mood of buyers and allow catalogue businesses to respond more readily. Catalogues are great way of driving new product sales and whilst underpinning core brand values. Again it points to the positive effects of catalogue marketing. What are the major threats to your sales? 46% 41% 29% 23% 44% 17% 12% 26% 23% 17% 16% 37% 11% 10% Lack of customer confidence Rising costs Poor performing distributors/ sales team Marketing not performing as it should Declining sales and marketing budgets Competitors in the UK Competitors overseas Don t have a catalogue Have a catalogue 6 Catalogues4Business Ltd

7 With a strong focus on developing sales, it isn t surprising that companies are using an array of tools to drive sales. Interestingly, it s networking (39%) that comes out on top for the most used marketing method, followed by marketing (34%). 17% 25% 39% Networking What s in the Mix? 31% 25% Electronic Brochure PoS literature Website without e-commerce 20% Printed Brochure Website with e-commerce 31% Advertising Which of the following sales and marketing tools does your company currently use? Networking can be quite costly if adopted regularly (which needs to be done to bring results). Travelling to and from networking events, let alone paying to be at an event itself can soon add up. marketing is obviously a lot more cost effective, but open rates are diminishing all the time. Advertising (33%) is the third most used marketing method by those surveyed. Like networking, it can often be a costly affair. However, along with networking, perhaps these two methods just highlight how much organisations value face-to-face and tangible marketing tactics. 33% 12% Social media Blog Third Party e-commerce sites Telesales 12% 11% Marketing 34% 21% PR 18% Distributors Field sales force 25% Search Engine Optimization 30% Pay Per Click Social media (31%) is also widely used by companies. However last year it was one of the most popular tools with 67% saying they used social media. So why the dip in usage this year? Have companies tried social media, but not got the results? SEO (30%) is also a popular marketing method for companies, which is very interesting as only 12% have a blog - one of the most powerful drivers with regards to delivering effective SEO campaigns. Telesales is the least used marketing tool, just 11% of companies now include this tactic in their marketing mix. Marketing Insight 18% Direct Mail (via post) Catalogue 18% 21% = Digital = Non-digital Typically printed media It s interesting to see that networking is still seen as an important marketing tool. As with all personal contact leaving something behind, such as a catalogue, can continue a sales-led conversation and extend your marketing reach. The Current and Potential Role of Catalogues in UK Plc 7

8 8% Catalogues and the Multi Channel Mix Catalogues are known to be a powerful tool for driving website traffic and web sales, and the research highlights this further. Companies which sell via a catalogue are far more likely to have a website with e-commerce, which in turn makes them more likely to deploy SEO, pay-per-click. Unsurprisingly they are more likely to have an electronic brochure too. Printed Brochure 42% 10% Electronic Brochure 27% 9% Point of sale literature 38% 10% 38% Networking 41% 26% 35% Website without e-commerce 29% Website with e-commerce 13% Blog 13% 11% Social media 33% 31% Which of the following sales and marketing tools does your company currently use? 12% 13% Third Party e-commerce sites 24% 15% Telesales 28% 46% 40% Marketing 15% Advertising 28% PR Distributors 23% 14% 33% Field sales force 17% 25% 16% 21% Pay Per Click 10% 27% Direct Mail (via post) = Don t have a catalogue 37% Search Engine Optimization = Have a catalogue Catalogues are also a big driver of/support to other sales initiatives. For instance there is a strong correlation between companies deploying catalogues and those using direct mail, marketing, a field sales force and distributors. Marketing Insight Marketing integration must be monitored and measured, although it is increasingly difficult to monitor each individual channel. Employing custom landing pages, voucher codes and key special offers can all give clues to channel responses. 8 Catalogues4Business Ltd

9 What Delivers Sales? A quarter (24%) are concerned with marketing not performing, and nearly one in five (17%) are worried about declining marketing budgets, yet at the same time companies are clearly focused on growing sales. This will obviously involve some careful planning and decision making, so we were interested to see which tools in the sales and marketing mix are deemed most crucial to sales. It s a surprise to see Networking and Advertising taking top spots this year. Advertising was way down the order last year, this may reflect an increasing awareness of paid-for digital advertising as against traditional of the page. Digital and traditional advertising were not split out. Similarly networking is increasingly popular and his isn t split out across digital and traditional channels. We may be seeing a growth in digital networking along with traditional face-to-face networking and responders are enjoying the benefits of both. 30% Networking Advertising TOP 5: 1. Networking 2. Advertising 3. Website with e-commerce 4. Field Sales Force 5. Social Media 15% SEO marketing Telesales Distributors Printed brochure Website with e-commerce Field sales force Social media Catalogue Website without e-commerce Pay Per Click Third party e-commerce sites PR Point of sale literature Direct mail (via post) Electronic brochure 0% Blog Marketing Insight It s interesting to see the top four spots occupied by marketing activities that can be significantly enhanced by the introduction of a catalogue. The Current and Potential Role of Catalogues in UK Plc 9

10 Changes to the Mix Going Forwards What does your company plan to start using over the next 12 months, which it doesn t use now? Over the course of the coming year, the companies studied are keen to explore new ideas and expand their marketing tools. Many mention new initiatives that are relatively low cost (if you exclude the time involved) such as social media (10%). Interestingly, advertising seems to be a popular route for many over the next year, both through traditional and digital advertising. 9% stated they will be carrying out some form of print advertising, whilst 8% said they will be undertaking a Pay Per Click campaign. SEO also got a big vote from companies with one in ten saying they will be executing an SEO plan. Other popular marketing activities that companies have suggested they will be implementing over the next 12 months include marketing (7%), a new website that has no e-commerce function (7%), and employing a field sales force (7%). Given the close and successful interaction between the above tools, in companies which also have catalogues, it is disappointing to see that only 5% plan to test some form of catalogue which they can sell from in the coming year. This suggests that many businesses perhaps don t see themselves as suited to selling via a catalogue, or perhaps view this is as an expensive route to take. Yet almost any business which can sell via e-commerce can sell through a catalogue and as seen on page 17 (Share of web sales driven by catalogue), catalogues can have a huge impact on e-commerce sales. 10% Social media Search Engine Optimization 7% 9% Field sales force Advertising Website without e-commerce 8% 6% Pay per click marketing PR Networking 5% Website with e-commerce 3% Direct Mail (via post) 4% Telesales CATALOGUE Third party e-commerce sites Printed brochure Electronic Brochure Point of sale literature Distributors Blog Barriers to Sales & Marketing Success While it is understandable that companies will be keen to make the most of the many low cost marketing options open to them, and stick to traditional marketing methods such as advertising and networking, the exploration of new marketing tools is also being driven by the fact that it is becoming increasingly difficult to reach the target audience. Open rates for campaigns have dropped 13% It s hard to make an impact through advertising 33% It s harder than ever for telesales to reach people 22% Operating a field force / sales force is becoming too expensive 17% It s very hard to find sales people who can sell 19% People are so bombarded with s that something in the post has more impact 24% Networking is becoming less productive 7% Market Insight Its interesting to see that around 7% employ a field sales force, yet 19% view this activity as expensive and a barrier to success. Catalogues and direct mail can significantly increase market penetration at a fraction of the costs of a sales force. 10 Catalogues4Business Ltd

11 Digital Tools Is your website designed to work on mobile devices? There is an increasing dependency on the web for sales, and a drive towards greater use of social media channels. With this in mind we wanted to see how businesses were embracing the digital age. Are they being clever about it? Or simply doing it, because everybody else is, so seems to be the right thing to do. Many companies studied have a website in place, and one in five companies have an e-commerce function on the site, but there appears to be complacency about ensuring sites keep pace with the mobile revolution. YES 38% NO 34% Don t Know Just 38% of those studied have ensured their website works on a mobile device. Even more alarming, nearly one in five (17%) said that they weren t sure if their site did work on a mobile device or not. 17% Every Week (29%) Every Month (25%) How often do you look at your web traffic statistics? In tune with the above, companies appear relaxed about monitoring their website with less than half (44%) checking their website traffic stats at least once a week. More worryingly though 11% never check their stats or simply don t know. Every Day (15%) Less Frequently (8%) Digital Insight More and more people are using mobile devices to read s and view websites, although the vast majority of sales transactions are still carried out on tablets or laptops. By monitoring your web activity, you can track your customer behaviour and adapt your marketing activity accordingly. Never (5%) Don t Know (6%) The Current and Potential Role of Catalogues in UK Plc 11

12 Smoke and Mirrors! What was the % of your company s total sales in the last year via your website? 6% None 16% 1-10% 12% 11-20% 13% 21-30% 9% 31-40% 71-80% Getting to grips with an effective online presence is crucial to all businesses. Websites are essentially passive and only respond to activity instigated by the customer, generally a response to activity in another channel. Websites sit at the heart of all current marketing activity and are great indicators as to how effective your marketing communication is. Websites are still the number one point of contact for potential customers and if they aren t driving sales, or generating enquiries, huge opportunities are being missed. Understanding how to make your website drive more sales must be a key business priority. 1% 81-90% 2% % 2% 13% are unsure about how to measure the effectiveness of their website Web as a Sales Channel 3% 61-70% 18% believe SEO is a dark art 8% say it s hard to measure the ROI on PPC 6% 51-60% For instance: 20% are yet to develop a social media strategy 6% 41-50% With digital marketing moving at an increasingly rapid pace, it could be that companies are just unsure about what to do for the best, and what advice to take. Digital Insight Don t know 12 Catalogues4Business Ltd 12% Given the confusion and lack of testing and measuring in place, the web could be a massively underdeveloped channel.

13 Digital Tools Which digital marketing tools are relevant to my business? 35% 10% 17% 26% 14% 11% 40% RSS / Blog 19% 33% Google Plus has made an appearance for the first time this year and its significance cannot be ignored. LinkedIn is still an important player in B2B but many companies fail to develop consistent strategies. Twitter and Pinterest are incredibly good at developing online PR and generate activity but are notoriously difficult to measure. Facebook has had its critics but still has the ability to integrate with customers business and private lives, probably more than any other tool. You Tube is still under used in B2B and is really easy to exploit. Behind Google, it is the second most popular search engine, especially for product research. Videos are exceptionally good at engaging customers. But no tool should be seen in isolation, a digital marketing plan is the sum of its parts. The more tools you employ the better the chance of success. Digital Insight No real surprise that Twitter, Facebook and LinkedIn are the most popular channels. However Google Plus is slowly catching up with 17% of those studied now using the platform. With its SEO benefits too, companies should definitely be considering this as a serious marketing channel. The Current and Potential Role of Catalogues in UK Plc 13

14 Digital Tools Which of the following digital marketing tools do you think are relevant to your business by business category? RSS/Blog There is a whole host of digital marketing tools and techniques at the disposal of businesses today. So we asked respondents which they feel are most relevant to them at this current moment in time. The companies were offered free reign to choose as many as they liked. Google Plus is becoming more popular with businesses who sell to businesses, with 19% suggesting this. However, what is a concern, is that across the board, no matter the target audience (consumer, business, or both), just 1 in 5 believe website analytics is relevant. Consumer Other Business Both Market Insight While it is predictable that B2C brands are more likely to deploy Facebook, and B2B companies are going to favour LinkedIn, it is interesting to see that Google Plus has such a strong following among B2B organisations, with 19% seeing it as relevant, compared to 15% of consumer facing companies. 14 Catalogues4Business Ltd

15 So where do catalogues fit in the mix? For clarity, during the study we took care to clearly define to respondents that catalogues are printed literature that you sell through, or use to drive sales. This includes brochures that you can order directly from. Based on this definition 45% have such a catalogue. Do you sell through a printed catalogue or brochure? (meaning a brochure with an order page) Market Insight Catalogues Virtually all e-commerce activity can be improved by supporting it with a catalogue. Not only that, they can significantly improve the success of networking and sales teams. Businesses fail to exploit the silent salesperson that is the catalogue. NO YES 55% 45% 26% More than 10 Years 16% 2-3 Years 14% 1-2 Years 3-5 Years 11% 9% Less than a year 5-10 Years Less than 6 months 2% Don t Know The Current and Potential Role of Catalogues in UK Plc 15

16 Why Not? 9.0 % Is a catalogue appropriate? We tried one before and it didn t work 49.0 % Catalogue is not appropriate for my business 12.0 % Catalogues cost too much 18.0 % They re an outdated sales channel 19.0 % Our customers prefer using the web Catalogues are a risky item We don t need one we have a brochure Wouldn t know where to start 4.0 % 5.0 % 3.0 % 9.0 % The majority of the companies who don t have a catalogue say they don t have one because it is not relevant to their business (49%). Considering one in five companies said that having a website with an e-commerce function was crucial for their business, which was also voted the third top driver of sales behind networking and advertising, coupled with the fact that catalogues can aid any networking activity, companies ARE in clear need of a catalogue. 19% of companies said that their customers prefer using the web and 18% said catalogues are an outdated sales channel. Yet earlier on 24% of businesses said people are so bombarded with s that something in the post has more impact. Never thought to have one Market Insight Almost every company who has an e-commerce site can sell by catalogues too. Catalogues are also a great way to maximise other marketing tactics such as networking. 16 Catalogues4Business Ltd

17 What % of your company s total sales in the last year was generated directly through the catalogue? 1-10% 1-10% 11-20% 21-30% 21-30% 31-40% 41-50% Are Non Catalogue Users Missing Out? Segment indicates number of people % 11-20% Just a quick look at the figures shows how successful catalogues are for those businesses that use them, with one in ten saying their catalogues bring in half their sales, whilst nearly one in five (18%) say that their catalogues deliver 30% of sales. What s even more promising is the fact that the majority of businesses with a catalogue said that this year their catalogues have brought in more sales than previous years (33% agreeing to this). None Again the figures make for positive reading with 14% stating that their catalogues drive 40% web sales % 61-70% % 71-80% 81-90% How do your total sales from your catalogue(s) compare to previous years... 31% 33% Same More Share of web sales driven by catalogue 18% Less 31-40% 9% This is our first year 1-10% 11-20% 8% Don t know 21-30% Segment indicates number of people Importance of catalogue as sales channel in coming year 6% Not at all important 14% Less important than last year None 41-50% 18% 45% More important than last year Same as last year in terms of importance 4% Crucial 61-70% % 5% Don t know 51-60% 81-90% Not surprisingly, as a sales channel, the catalogue is just as important to companies as it was last year, with one in five (18%) then saying it s going to be even more important for them this coming year. The Current and Potential Role of Catalogues in UK Plc 17

18 Catalogue Issues With nearly half (45%) using a catalogue within their marketing mix, and their role set to increase in the year ahead, companies which deploy them are looking at ways to improve them. What are your priorities for your catalogue this year? Increasing average order value Improving the quality of our database Getting the catalogue to sell more without costing more to produce Introduce new products Rationalising our database to reduce costs Don t have a catalogue priority this year Reduce catalogue production costs Reinvigorating the catalogue so it becomes a serious sales channel Reduce catalogue mailing costs Improve interaction between catalogue and website 45% Increase frequency 11% 18% 30% 35% 16% 22% 10% 15% 9% 42% Whereas in last year s study introducing new products and increasing the database were top priorities, this year the main focus for those with a catalogue is to get it to sell more without paying more to produce it (45%). The close interplay between the catalogue and website is recognised here, with over one in five (22%) keen to improve that interaction in the coming year. Increasing the average order value is also of high importance with 30% stating this. Similar to last year, increasing frequency and not having a catalogue priority, sit at the bottom of the wish list. Market Insight Like with all good marketing, communication and joined up thinking is key. Businesses need to say what they want from their catalogue in order for the company/persons tasked to manage it, get it right, and more importantly get it making sales and meeting objectives. 18 Catalogues4Business Ltd

19 ? Measurement Given that many of the companies struggle to measure the performance of their website, it is perhaps not surprising that 70% of catalogue users are also struggling to measure the value of their catalogues. Even though it s not exactly surprising, 70% is a large figure, and something which is pretty worrying; the fact that such a huge percentage still struggle to measure a marketing tool that really doesn t need to be difficult to measure. Any catalogue specialist should be advising its clients on how best to establish metrics for the catalogue. This should include measuring its impact on web sales, gauging direct sales generated off the age plus testing and measuring new techniques and ideas. Equally when it comes to digital marketing, the medium is massively suited to measurement. It is possible to minutely measure web traffic statistics, the sources of traffic, which channels are performing better, which content is holding the site visitor s attention, which content is prompting them to share and which is driving them to buy. As we saw earlier, tools like analytics are used, but over one in ten aren t, or if they are they are casually checking once a month or even less than that (33% admitting this). In the digital world, which changes all the time, and works at such a rapid pace, 4 weeks is simply not enough to be measuring web traffic. Businesses need to get smarter when it comes to measurement. Market Insight Ask your digital and catalogue/mail order specialists to explain the metrics they suggest you put in place. If they don t help you test and measure, change provider. About Catalogues 4 Business & Digital 4 Business Formed in 1998, Catalogues 4 Business is one of the UK s leading catalogue marketing companies. The C4B team has created well over 1000 catalogues. They work with both B2B and B2C businesses, and include large multi-nationals right through to startups, both in the UK and overseas. In 2012 its achievements were recognised, by being awarded the ECMOD Supplier of the Year Award. With an increasing drive towards a multi-channel sales future, Catalogues 4 Business acquired a small digital agency in March This was re-launched as Digital 4 Business. As well as sales-focused catalogues, Catalogues 4 Business can now offer a proven e-commerce solution, along with digital marketing, search engine optimization, social media and web design. For a sales solution driven by either pages or pixels, and preferably both, you need to talk to Catalogues 4 Business and Digital 4 Business on The Current and Potential Role of Catalogues in UK Plc 19

20 Part of the 4Business hub Call pixels All content and research by Catalogues 4 Business Ltd 2014